CALIFORNIA – The University of Southern California’s annual Casden Real Estate Economics Forecast, released December 3, predicts rising rents across Southern California over the next two years.
The report, which reviews current market conditions, provides two-year projections for multifamily rents and vacancy rates across Los Angeles, Orange, San Diego and Ventura counties, as well as the Inland Empire.
“Housing affordability keeps shrinking for the people who need it most. The most data-backed solution is obvious: we need more housing,” noted USC associate professor and forecast author Moussa Diop.
AI bubble, rising federal debt, high interest rates
This year’s analysis also notes several new broader economic concerns – a stock market bubble fueled by AI investment, rising federal debt, and elevated interest rates for the foreseeable future.
The report notes that assessing the stability of the AI sector is challenging given the lack of transparency in private investment, and there are signs that investor confidence in its expected returns is declining.
In addition, rising federal debt could slow the economy because it may cause long-term interest rates to go up. Interest rates are no longer at the near-zero levels of the early 2020s, and the multifamily lending market is still adjusting to these higher rates.
When fewer homes get built — whether because the economy slows or loans are harder to get — housing becomes less affordable, and renters feel the impact the most.
Rent increases by County
Diop noted that without more homes, affordability problems persist despite rent control or subsidies.
Looking ahead, the forecast expects rents to rise slowly in 2026 and 2027, with insufficient new housing except in a few local areas:
Inland Empire
October 2025: $2,112 average rent
October 2027 Forecast: $2,166 average rent
Average Annual Rent Growth: 1.90%
The Inland Empire is Southern California’s most affordable rental market, supported by its logistics-based economy and incoming residents from coastal counties. Though its affordability is shrinking, the Inland Empire shows how new supply can slow rent growth amid rising demand.
Los Angeles County
October 2025: $2,336 average rent
October 2027 Forecast: $2,350 average rent
Average Annual Rent Growth: 0.64%
Los Angeles County’s rental market remains undersupplied, with years of slow construction keeping most apartments occupied despite a recent, temporary increase in new units. Without sustained development of both market-rate and affordable housing, Los Angeles will continue to lag the region in renter relief and investor confidence.
Orange County
October 2025: $2,776 average rent
October 2027 Forecast: $2,859 average rent
Average Annual Rent Growth: 2.52%
Orange County, Southern California’s priciest rental market, has very few vacant apartments due to limited new construction. Without ongoing large-scale development, Orange County will stay constrained and one of Southern California’s least affordable rental markets.
San Diego County
October 2025: $2,535 average rent
October 2027 Forecast: $2,563 average rent
Average Annual Rent Growth: 0.99%
San Diego County is Southern California’s most responsive major rental market, where pro-housing policies and steady development have kept rents competitive. In the past five years, San Diego added about 23,000 rental units—almost twice as many as Orange County’s 12,000.
San Diego’s focus on denser, transit-friendly development has stabilized rents and provides a model for other Southern California counties.
Ventura County
October 2025: $2,628 average rent
October 2027 Forecast: $2,681 average rent
Average Annual Rent Growth: 1.19%
Ventura County remains a high-cost, low-supply rental market, ranking among Southern California’s most expensive regions. Even though new housing is mostly mid-priced, there still isn’t enough to make rents cheaper.
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